Why the Average Family Has Only $5,000 for Retirement

Too many Americans are ignoring their retirement savings, and that's a big problem. According to the Economic Policy Institute, the U.S. median retirement savings stands at $5,000.

There are myriad reasons for such an alarming, and inadequate, number, and we'll get to those in a moment. But the EPI points the icy finger of guilt at the rise of the 401(k) plan.

[See: How to Save for Retirement on Less Than $40,000 Per Year.]

"The shift from pensions to 401(k)s has failed the majority of American workers and disproportionately harmed disadvantaged groups," says Monique Morrissey, an economist with the EPI.

She notes the median family between the ages of 32 and 61 has only $5,000 saved in a retirement account, while the top 1 percent of families has a million dollars or more.

"For many groups -- lower-income, black, Hispanic, non-college-educated, and unmarried -- the typical working-age family has no savings at all in these accounts ," the EPI reports.

"Our retirement system used to reduce inequality, but since the shift to 401(k)s it has only served to magnify it," Morrisey says. "These accounts are accidents of history that were never designed to replace pensions, and it should come as no surprise that they have not worked for the majority of people. Decades after the rise of 401(k)s, pensions are still far more important to retired people. To make sure Americans are prepared for retirement, we need to defend existing pensions and expand Social Security."

https://au.finance.yahoo.com/news/why-average-family-only-5-144623163.html

Why the Average Family Has Only $5,000 for Retirement

Why the Average Family Has Only $5,000 for Retirement

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